Exxon Mobil Leads Surge by Oil Companies

There’s no energy crisis in the energy industry, where soaring prices for oil and natural gas sent profits through the roof in the fourth quarter. Exxon Mobil Corp.’s earnings set a record for any company anywhere.

Exxon Mobil said Wednesday its earnings surged 90% to $5.2 billion, a quarterly record for a U.S. company. Its full-year net profit hit $16.9 billion, also a record, shattering the previous mark of $10.8 billion set in 1999 by Citigroup Inc.

Chevron Corp.’s earnings rose 88% to $1.54 billion. Profit more than doubled for both Texaco Inc., which Chevron is acquiring, and USX Marathon Group. Los Angeles-based Occidental Petroleum Corp. posted an 82% leap in operating earnings.

Analysts said profit margins on oil sales jumped because the companies cut costs while energy prices surged. Many also boosted production. Earnings likely will keep rising as oil-producing nations curtail output and gas supplies lag demand, analysts said.

“Energy prices will remain relatively high throughout the year and earnings for the industry will most likely continue to surprise Wall Street,” A.G. Edwards analyst Bruce Lanni said.

Oil companies also benefited from wider refining margins, or the difference between the cost of a barrel of oil and prices for the products made from it, as last year’s glut dried up. Chevron’s quarter was the best for its refining and fuel-sales division in seven years, Dain Rauscher Wessels analyst Stephen Smith said.

Exxon Mobil, the world’s largest publicly traded oil company, earned $1.46 a share in the fourth quarter, topping First Call’s $1.31 average forecast.

“The results this company has been able to generate have been awesome, and the fourth-quarter underscores that,” said Gene Nowak, an analyst with ABN Amro.

Exxon Mobil and rivals have been cutting costs to find, extract and ship oil and gas. Exxon Mobil Chairman Lee Raymond has said the merger that created the company would result in savings of at least $4.6 billion a year. Exxon Corp. bought Mobil Corp. in November 1999 for $85.2 billion.

The company’s profit topped its previous record from the third quarter, when it earned $4.29 billion. Exxon Mobil earned $11.8 billion from January to September, more than any U.S. company has earned in a full year.

Excluding extraordinary items in both periods, Exxon Mobil earned $5.12 billion, or $1.46 a share, nearly double the $2.71 billion and 77 cents a share of a year earlier.

Shares of Exxon Mobil, based in Irving, Texas, outside Dallas, fell 19 cents to $81.63 as investors questioned whether earnings have peaked, analysts said. Its stock has fallen 3% in the last year.

“The conventional wisdom is that this is as good as it gets,” Fahnestock & Co. analyst Fadel Gheit said. “But these old dogs have a few new tricks. Some of them could surprise us because of their cost cuts.”

Profit from operations at Chevron, the second-largest U.S. oil company, increased to $1.54 billion, or $2.39 a share, from $819 million, or $1.24, a year earlier. Revenue rose 23% to $13.5 billion from $11 billion.

Chevron shares rose 31 cents to $79.88. They are down 10% in the last year.

Texaco had record profit from operations of $840 million, or $1.55 a share, up from $370 million, or 67 cents, a year earlier. Revenue rose 37% to $14.4 billion from $10.6 billion.

Operating profit from U.S. exploration and production more than doubled to $547 million. U.S. refining and marketing profit rose 17-fold to $68 million.

Shares of White Plains, N.Y.-based Texaco rose 38 cents to $59.13 and have risen 2.4% in the last year.

Marathon, the fifth-largest U.S. oil company, said profit from operations rose to $386 million, or $1.25 a share, from $148 million, or 47 cents, a year earlier. Revenue rose 10% to $8.05 billion from $7.3 billion.

But Marathon lost $310 million net, or $1 a share, after taking $696 million in charges, mostly related to forming a joint venture with Kinder Morgan Energy Partners. A year earlier, a $23-million tax-related gain made net income $171 million, or 55 cents.

Shares of Marathon fell 19 cents to $27.31. They are up 7.6% in the last year.

Occidental said profit from operations increased to $349 million, or 90 cents a share, from $192 million, or 52 cents, a year earlier. Sales rose 54% to $3.94 billion from $2.57 billion.

Occidental shares fell a quarter to $22.75. They have climbed 9% in the last year.